A character made of cubes? Is it bad for gaming?
The BGE needs more time to process multiple objects. Therefore it is advised to join objects that form a larger part of the landscape (e.g. a forest).

On a character the requirements of the character handling will dominate. 

From artistic perspective an object that deforms (skin) is better to handle as a single object and animated via armature. 

If you have objects with rigid parts like a robot or a car where nothing deforms you might use multiple objects. Nevertheless the armature method is still applicable.

You might even need a mix of both. E.g. the deformable mesh for presentation and the rigid objects for collision detection (check if the hand touched anything).

This strongly depends on your needs and your focus.

Other requirements might be:


breakable (can be done with both, but different objects are easier to handle).
lots of instances (here you need to look at the performance).


Edit:

When you want to change items and clothes in-game you better have them separated. If that is not the requirement they can be part of the skin mesh.